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Questions over plan to hasten JKIA takeover

By Macharia Kamau and Rawlings Otieno | February 22nd 2019 at 00:00:00 GMT +0300

Kenya Airport Authority Chief Executive Officer Jonny Andersen (right), Corporation Secretary Katherine Kisila (left) and General Manager Finance Alex Gitari when they appeared before the National Assembly Public Investment Committee. [Boniface Okendo, Standard]

There could be plans to fast-track the deal to hand over Jomo Kenyatta International Airport to the national carrier despite legal concerns, unionists have claimed.

Kenya Airways (KQ) has submitted a proposal to Kenya Airports Authority (KAA) to run the airport over a 30-year period while paying concession fees to the operator.

The airline is partly pegging its return to profitability to what it has termed enhanced synergies with the airport.

There are, however, claims that the deal is being expedited without strict adherence to the laws overseeing partnerships between public entities and private sector firms.

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In documents filed in court, the Kenya Aviation Workers Union (KAWU) claims that KQ and KAA plan to conclude the deal by April this year.

The union has opposed the proposed deal and had threatened to mobilise its members to go on strike but backed down after talks with senior Transport ministry officials.

“The process could be completed in April 2019. The respondents appear to be in an extreme hurry to transfer JKIA to a private entity without full and frank disclosure of information to key stakeholders and the public,” said KAWU in the papers. The union wants the court to order KAA to follow the Public-Private Partnership (PPP) Act, the Public Procurement and Disposal Act and the Constitution in looking for an operator for JKIA.

In its bid to manage JKIA, KQ had submitted a privately initiated investment proposal (PIIP) to KAA and hired a consulting firm as a transaction adviser. But the National Assembly’s Public Investment Committee directed that the Sh150 million tender awarded to MMA Consortium be cancelled.

The committee sought to know why KAA approved a restricted tender, yet the matter was not urgent.

“The law is clear under which circumstances a restricted tender can be awarded. There was no justification for the restricted tender that KAA entered into. Transactional advisory is not so technical as to warrant a restricted tender,” said Homa Bay County Woman Representative Gladys Wanga when the committee met KAA officials at Parliament buildings.

While there are provisions allowing for such a proposal in the PPP Act, KAWU notes that the deal between KQ and KAA does not meet the conditions that are prescribed in the Act as warranting a PIIP.

They include instances where there is an emergency or where the firm being contracted is the only company that can provide such a service.

“The entire transaction is in breach of the provisions of the Public Private Partnership Act, 2013, and is unlawful by virtue of Article 47 of the Constitution,” said KAWU.

The union also claims that the deal is an attempt by KQ to avoid paying the Sh4 billion owed to KAA for the use of its airports. JKIA accounts for the bulk of KAA’s revenues, at over 70 per cent, and taking it away could spell financial doom for the authority.

KQ is also implementing a turnaround plan and revenues from JKIA would be a boost to its bottom line.

 “The proposed transaction is an oddly unique one. Ideally, in a public private partnership transaction, the private entity constructs and provides the infrastructure to the public entity at a fee. But in the KQ/KAA deal, the private entity is taking over a strategic public asset without paying anything,” said the union.

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